An Ulta Beauty store in New York, US, on Monday, Aug. 19, 2024.
Yuki Iwamura | Bloomberg | Getty Images
Ulta Beauty shares slumped on Wednesday morning, as the company said it sees “headwinds” and tougher competition in the beauty industry.
As it hosted its investor day near its Chicago headquarters on Wednesday, the specialty retailer stuck by its forecast for this fiscal year. Ulta said it anticipates net sales will range from $11 billion to $11.2 billion and comparable sales will range from a decline of 2% to roughly flat. It said earnings per share will range from $22.60 to $23.50.
For 2026 and beyond, Ulta said its financial targets will be 4% to 6% net sales growth and low double-digit diluted earnings per share growth. It said it expects mid single-digit operating profit growth and operating margins around 12% of net sales.
Yet it did not provide specific outlook for the 2025 fiscal year. The updates come after the company missed Wall Street’s earnings expectations and cut its full-year 2024 forecast in August.
In his opening remarks at the investor day, CEO Dave Kimbell said this year “has been more challenging than planned.” Kimbell said the beauty category has normalized to more modest historic growth levels, the consumer backdrop is more volatile and more competition has emerged, especially in the prestige category.
He said the company is taking action to boost its sales by striking partnerships with new brands, expanding its loyalty program and personalizing promotions to engage customers.
Plus, he said demographic trends will drive growth for Ulta. More men are buying beauty products, including fragrances and self-care items.
Younger generations, Gen Z and Gen Alpha, are more interested in spending on beauty than prior generations, particularly on skincare or as a form of self-expression, Kimbell said. And he added Hispanic customers, who tend to be more engaged in the category, are becoming a larger portion of the U.S. population.
“While we anticipate that some of these headwinds will persist in the near term, we are confident in our ability to on our plans and set ourselves up for long term growth,” he said.
In her presentation on Wednesday, Chief Merchandising Officer Monica Arnaudo said Ulta will step up its emphasis on exclusive products, lead on beauty trends and carry a mix of trusted, well-loved brands as well as promising up-and-comers.
“We are experts in identifying [and] bringing key trends to the market with our brand partners,” she said. “This will be more critical than ever as the market become increasingly competitive.”
In makeup, for example, more shoppers seek multiuse products and want to get supplies for glamorous looks. In skincare, customers want to know more about items’ ingredients and want dermatologist-recommended brands as they grow more health conscious, she said. And in hair care, shoppers are thinking beyond shampoo and conditioner and adding on products like scalp treatments or items designed for curly and textured hair.
Already, Arnaudo said, the company has more than 40 exclusive brands and more than 65 brands with some exclusive products.
This story is developing. Please check back for updates.